IN THE COURT OF APPEALS OF TENNESSEE FILED AT KNOXVILLE March 27, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk

JEAN PEELE, ) C/A NO. 03A01-9707-CV-00244 ) Plaintiff-A ppellant, ) KNOX CIRCU IT ) v. ) HON. DALE C. WORKMAN, ) JUDGE RICH ARD M. EA RL, JR ., ) Individually and d/b/a FINANCIAL ) SERVICES COMPANY, ) AFFIRMED ) AND Defendant-Appellee. ) REMANDED

SAMUEL W. BROWN , LOCKRIDGE, BE CKER & V ALONE, P.C., Knoxville, for Plaintiff-A ppellant.

FARRELL A. LEVY and JAY W. MADER, MCDONALD, LEVY & TAYLOR, Knoxville, for Defendant-Appellee.

O P I N IO N

Franks, J.

In this action for debt, the Trial Judge, after an evidentiary hearing, dismissed the suit as to Richard M. Earl, Jr., and entered judgment against Financial Services Company in the amount of $5,000.00. Plaintiff has appealed.

Plaintiff brought the initial action in Sessions Court, wherein her stated cause of a ction was : [For] $7,200.00 which represents a debt of a partnership Financial Services C ompany inc urred by M ichael B. M etzger, a partn er in this company, on beha lf of the partnership. M r. Earl is also a partner.

We conclude after reviewing the narrative transcript of the evidence and exhibits, that the evidence does not preponderate against the Trial Judge’s finding that defen dant E arl was not liabl e to the p laintiff f or the d ebt. See T.R.A .P. Rule 13(d).

The record shows that plaintiff engaged in certain business dealings with Michael B. Metzger, who in some fashion was involved with a trust known as Financial Services Company, wherein defendant Earl acted as the Managing Trust Director. Metzger’s dealings with the plaintiff can be characterized as a variation on a “Ponzi sc heme”. T he eviden ce prepon derates that M etzger wa s not autho rized to borrow any money on behalf of Financial Services Company or otherwise bind the compan y or Earl by signing or stampin g Earl’s nam e. In plaintiff’s relationship w ith Metzger, she wrote a check in the amount of $5,000.00 payable to Metzger on July 5, 1994. In re turn for this c heck, M etzger wro te a check in the amou nt of $6,00 0.00 to plaintiff on that date. The check to plaintiff was drawn on Metzger’s personal account in his bank, and plaintiff’s $6,000.00 check was honored on July 13, 1994. After Metzger’s check was honored, plaintiff wrote a second check to Metzger in the amount of $6,000.00 on July 18, 1994. Metzger was about to leave town and defendant Earl picked up the check for Metzger at plaintiff’s business. The check was deposited in Metzger’s personal checking account the same day. In return for that check, Metzger provided plaintiff with his personal check post-dated August 8, 1994, in the amount of $7,200.00. When plaintiff negotiated that check, however, it was returned not paid as the result of insufficient funds. When this occurred, Metzger issued plaintiff and her husband a letter in the form of a promissory note for $7,200.00 at 12% interest, dated September 29, 1994. The note was signed by Michael B.

Metzger, who identified himself on the note as Trust Director/Financial Services Company. At this juncture, we note that defendant Earl testified that Metzger was not authorized to represent the company in that capacity, and that any document purporting to authorize Metzger to act was forged. The Trial Judge evidently accepted Earl’s testimony as true on this issue. Metzger then left town and failed to make good on the check or promissory note. Subsequently, Earl signed a check drawn on Financial Services Company in the amount of $200.00 to plaintiff for “interest on Metzger’s loan”. Earl also testified that neither Financial Services Company nor himself rec eived the m oney obtaine d by Metzg er or benef itted from th e transaction in any way, nor did Financial Serv ices guarantee the loan m ade by Metzger.

The evid ence as de monstrated by the check s and othe r docum ents, is that the transactions were between the plaintiff and Metzger individually, and plaintiff has esta blished no bas is to hold defen dant E arl perso nally liable for thes e transa ctions.

As best we can tell from the record, it was plaintiff’s theory below that Earl w as a par tner of M etzger in a partne rship kn own a s Finan cial Serv ices Co mpan y.

The evidence establishes there was no partnership operating under this name or that Metz ger and Earl w ere part ners.

Plaintiff argues that Earl is liable under T.C.A. §48-12-104 for pre- corporation transactions. The record does not establish that this theory was advanced below, bu t in any event, the evidence does not e stablish a bas is to hold Ea rl liable under t his prov ision of the Co de.

Finally, plaintiff argues that she should have been awarded $7,200.00 plus interest ag ainst the rem aining def endant. W e find this issu e to be with out merit from the evidence in the record.

Accordingly, we affirm the judgment of the Trial Court with costs of the appeal asse ssed to app ellant.

__________________________ Herschel P. Franks, J.

CONCUR:

___________________________ Don T. McM urray, J.

___________________________ William H. Inman, Sr.J.